In this article, I am going to share with you a simple, proven strategy to invest in mutual funds and outperform the S&P 500.
This is my proven investing process, “philosophy” if you will, as it relates to Mutual Funds and my recommendations for newbie investors or a millionaire who choose to invest in mutual funds.
When it comes to investing I hear people make the same two excuses over and over. They say well nobody can beat the market, I’m just going to invest in index funds. I read a book and I read an article on the internet so that is what I am going to do (Now everything on the internet is true ?) Abraham Lincoln said that. Think about it, it’ll come to you later.
The other excuse is that people say well you can’t beat the market, and investing is too complicated. I mean, investing is intimidating. Investment people are intimidating. I feel two inches tall when I talk about investing. It’s intimidating, etc.
Well, um, the second one is true: investing can talk with financial planners, can be intimidating, but it shouldn’t be, it’s not that complicated. And, when you sit down with someone that knows what the flip they’re doing they can help you put the cookies on the shelf where you can reach them.
There are resources available for us like saveyourbucks.com, but let’s face it for most people it is easier to be lazy than take the time to become self-educated. Thankfully not you, you are here and you are reading this article so congratulations! You will see some of the best business and financial experts on the planet represented here at saveyourbucks.com, as well as passionate newbies who have a message to share with the world.
There is not a lot to understand about mutual funds. Like most things and people in life, you just need to understand their track record of the mutual fund and, that’s how I started investing, many years ago.
Now, I know there’s a lot of people that have opinions about my investment advice but I do have millions & millions of dollars in mutual funds. I wonder how that got there? It must have been that I understood something about t mutual funds, right? That money just didn’t appear there, I haven’t hit the lottery. I was bankrupt at 28 years.
old. I’m 57 now , so what happened during those 30 years?
Well, I used the investment principles that I have taught in countless articles and radio show episodes. I don’t tell you to do something and then go do something different. I do what I tell you to do. Oh, and by the way, it has worked for me and lots of others.
Lots of millionaires calling in on the millionaire theme hours say “Dave I got out of debt.
I loaded up my 401k with the four types of mutual funds you talk about. I loaded up my Roth IRA with four types of mutual funds, and here I am 20 years later and I’m a millionaire. Thank you.”
And I get that all the time. Most people would be shocked how many millionaires live within a few miles of where they live. I don’t know why when it comes to financial matters, and especially Mutual Fund investing, people seem to want to make it harder than it is.
So based upon TRACK RECORD, apparently the stuff we’re teaching works: and it’s not that complicated. And my mutual fund groupings have beat the market year after year! It is simple; You just pick mutual funds that have outperformed the S&P; it’s really not rocket science. Not all of them have outperformed the S&P. A lot of them haven’t. Over half haven’t, but don’t pick one that didn’t. So can you do basic research and find mutual funds that have a track record of outperforming the S&P.
Many people treat Mutual Fund Selection, like they are sitting at the racetrack and are going to bet on horses. I don’t bet on horses just because I don’t know anything about it and I don’t gamble because I don’t like losing money.
I work too hard for my money. So… but if you’re saying… I went to a dog track one time or a horse track one time when I was a youngster; and someone tells you, you know this horse has not won a race… ever! So, bet on that one stupid.
You know, this horse won the last three races oh, I probably might bet on him. You know, that’s all you’re doing when you’re picking a mutual fund. Did it beat the market? If it didn’t beat the market then don’t pick that mutual fund. That’s not rocket science. That horse hadn’t won a race. Don’t bet on that horse.
Why is Investing in Mutual Funds hard?
People think not making smart decisions doesn’t hurt anything. Leaving well enough alone is never a good idea. At some point, your lack of action will bite you in the butt.
It’s not hard; and this idea that you have to do what’s called passive investing and surrender and say, “oh well you really can’t beat the S&P; Dave Ramsey doesn’t know what he’s talking about”; oh well I don’t know, I mean I pulled up my stuff the other day and looked at it let’s see anything I got written down here. Just because I don’t have it all memorized. Let’s see here; um, aww, the mutual funds I’m personally invested in are the four types I talked about over the last 40 years I’ve averaged 0,02 percent. And on and on and on people over overwhelmed with laziness and indecision.
I am so tired of hearing, You can’t get 12% on your money! I know, I got 13% okay and the S&P during that time averaged 11.81 percent which is real close to 12 stupid people.
Thirty-year my investments averaged 11.3, the S & P averaged 10.89. So, I’ve outperformed the S&P over the past 30 and 40-year periods. Outperformed the S&P on the 20. The 10-year outperformed the S&P. Huh, go figure! Of course, I have, and you can as well.
Stop trying to make the simple complicated!
I understand the goal of some mutual fund salespeople is to create confusion, but if you are a regular reader of SAVE YOUR BUCKS, I hope you are beyond that.
So, can you consistently outperform the S&P? Do what I do. I picked four mutual funds that outperformed the S&P. I picked horses that won the race. I mean; what? You look down to the track record and it’s got a little chart in there. It’s got the S&P in one line and if your mutual fund you’re looking at lines not above the S&P on one line on the chart, you’re looking at the wrong one. Pick you another one. Why would you bet on a horse that hadn’t ever won a race? This is not rocket science people. I mean, think about it. It’ll come to you… Wow.
One of the problems we are all facing today is we have access to too much information.
It seems like as information increases, common sense diminishes. It is certainly not the Internet’s fault, but sometimes it seems that way.
I think the fundamental two problems are laziness, and people have no idea how to look at a person or companies, track record and figure out if this is someone they should be listening to.
Just because you like the color of her eyes is not a reason to listen to her if her track record is not obvious.
But then along comes the internet and lies to you and you can’t do that; oh really? Okay, maybe you can’t, but I can, and I have and it’s resulted in millions and millions and millions of dollars. Lots of millions by the way. It’s worked out well. I’m having a good time ya’ll. Life is good.
You know people that retired wealthy, it wasn’t an accident. They didn’t get to wealth, they got to retirement and go; “how did that happen? Where does that come from?”
They’re not surprised.
They know exactly where that money came from. It was an intentional act year after year, month after month, paycheck after paycheck being deducted into their 401k, into the Roth IRA, into good mutual funds year after year after year after year after year after year it’s just not sexy. It’s not a fish story to tell on the golf course! it’s just the tortoise.
He just keeps walking. He’s ugly. Just keeps walking. He’s ugly and nobody notices him. But hey, that’s the tried and true, proven way to become a millionaire. What all the data points tell us!
I’m not in the investing business. I don’t give a rip if you invest or not; I’m here to teach you. But I am getting a little sick and tired of the trolls out there bumping around the internet talking about how stupid Dave Ramsey’s investment advice is when my net worth is tens of millions of dollars.
So, I must be doing something right other than just selling books. Yeah, I sell a lot of books, that’s where some of that came from for sure, but most of it came from investing you guys, in real estate that I paid cash for and in good mutual funds. Speaking of my books, if you are serious you should buy one or two because I know they will sincerely help you solidify many important financial concepts and in your mind, for yourself!
See, if you put money in at the bottom of the market when the market was sixty-nine hundred sixty-four hundred whatever it was at the bottom after the crash, the big crash of 2008; do you remember when the world came to an end? If you put money in there and what’s the down payment today? 24,000. What is ah, 6,000:24,000? Is that four times? Do you think you guys are quick with your second-grade math? So if you put in a million dollars at the bottom what would you have now? 4 Million Dollars.
Uh, this is not hard, but the stock market is. See, you’ve got to learn people, you’ve got to learn what’s going on out there in the real estate world and the investing world if you want to have any money. The CD is not going to get you there. It’s a certificate of expression. It’s paying less than 1% in most cases. If you got a good one it’s one and a half; zippy.
So, get yourself educated. I don’t care if you are 18 or 80, you are never too young, or too old to start doing the right thing with your money.
At this point if someone asks you the smartest way to invest in mutual funds, what would you tell them? I just wanted to check and see if you have been paying attention.
Financial Peace to All!